In search of a European identity

First Europe, then… the world?

October 27, 2009by Nosemonkey

A few vague thoughts towards predicting a new global geopolitics:

Globalisation has been the undeniable trend of the last half century.

As transportation and communication technologies have advanced, the world has got smaller. You can now get from London to Australia in a day where, two hundred years ago – at the height of the nation state – it would have taken several times that to travel from London to Edinburgh. A century ago, most goods in your local shop would have been local to your (more or less) immediate area – even with the expansion of 19th century Empires and the arrival in Europe of affordably-priced exotic fruits and out-of-season vegetables, delivered via early refrigerated ships. Now we have to go to specialist shops to get local produce – and local today often means little more than “from the same country”. As for the interconnectedness of the global economy, we have had the ultimate proof over the last year as recession has spread around the world.

Communities arise due to a combination of proximity and common interest – the latter more often than not following the former.

Up until the dawn of the steam age, most modern nation states were highly fragmented, with much autonomy among the further-flung regions. The steam train – and later, the telegraph – enabled more effective administration over longer distances, and so nation states became more coherent as entities.

The proximity of most peoples on Earth has, over the last half century – since the advent of the Jet engine and, more recently, the virtual proximity made possible by the internet – likewise become ever closer. The ability to administrate over far larger areas has similarly increased. Where two centuries ago – as the French national identity was beginning to solidify post-Revolution and under the auspices of Napoleon – it would have taken a week to travel from Paris to Marseilles, there is now nowhere on Earth that you cannot get to in a week, no matter your starting point. Two centuries ago it took six days to travel from London to Edinburgh; a century ago it took six hours; now you can get from London to New York in six hours.

At the same time, with the globalisation of the world economy, previously disparate communities – separated by many hundreds of miles as well as by language and culture – are now economically interconnected via the a combination of the complexities of global finance and the fact that their local shops are full of goods from other countries.

New technologies lead to new identities.

It is possible over the last few centuries to demonstrate that advances in travel and communication technologies have led to consolidation and centralisation of governance structures, as it has become ever easier to manage large areas from a central capital. At the same time, shared identities have arisen, as previously disparate communities (sometimes nominally already under the same administration, but usually for all practical purposes largely independent of each other) have suddenly found themselves in the same boat. Scottish and Cornish become British; Normans and Savoyards become French; Milanese and Sicilians become Italians. Old identities are retained, but the new proximity provided by innovative technologies allows a top-down governmental and bottom-up social coming together.

The EU was, at its birth, backward-looking – yet accidentally stumbled upon an idea far ahead of its time.

The EEC was formed in the 1950s not as a reaction to new technology, but as a means of preventing the violence that so often ensued from the clashing interests of nation states. It was the dawn of the jet age, the year (1957) that Sputnik’s launch heralded the even more advanced era of the space age – yet the advances in transportation and communication that the jet engine and satellite were in the process of bringing about were barely on the radar of the EU’s founding fathers.

Nonetheless, the coming together of the previously competing states of a continent to pursue shared interests was to be made far easier by these new technologies. In 1920, to travel from London to Athens took days. By 1960 it was a matter of hours. Europe had shrunk. The EEC was formed just on the cusp of this new shrinkage, and so was in an ideal position to capitalise on the possibilities that the new technologies provided.

Approaching the present.

With the arrival of the internet, the world has shrunk yet again – only this time only socially/culturally, as we can chat away to people of any nation from the comfort of our front rooms. But as long as the physical transportation of goods over the internet remains impossible, for physical commerce we remain reliant on 20th (and even 19th) century technologies.

This places a geographical limit on effective economic interaction – at least when it comes to the exchange of day-to-day goods. If it takes more than a few hours to transport your goods from A to B it’s usually more trouble than it’s worth, especially with rising fuel prices. Large organisations may be able to trade over far larger distances – using economies of scale to make sending a refrigerated container ship packed with New Zealand lamb halfway round the globe make financial sense – but for the small business (as most businesses are), local trade remains the most effective. The arrival of the railway and the aeroplane expanded the geographical limits of the small business’s economic potential, but we have yet to advance much beyond these limits, set now for more than half a century.

The geographical limitations of (economic) communities.

In practical terms, if a journey of more than a few hours is too long to be economically viable for small businesses, then the geographical limit of most small businesses is more or less continental. At the same time, the EU has done a good job of continuing the work of postwar reconstruction and improving Europe’s transportation and communications infrastructure, ensuring that the EU area is one of the most effectively interconnected on earth – rivalled only by the United States of America, which has the added advantage of a) having been a coherent nation state for 90 years before the EEC came into being, and b) working with a pretty much blank canvas.

But this is a minor issue – there is a far more compelling reason why socio-economic communities today still have geographical limits: time zones. It may well be possible to travel to the west coast of America in half a day, and to speak to someone in Los Angeles, Seattle or San Francisco at any time. But we still cannot get over the fact that there is an eight hour time difference between London and LA.

With office hours generally running from 9am to 6pm, we have a nine-hour window for normal economic activity. Working with a company on America’s east coast while based in London is feasible – the five-hour time difference allows a four-hour overlap, with the Americans starting work around 2pm London time – but working with a company based in Seattle presents problems, with only a one-hour shared office window. For effective working, you need to be able to communicate with colleagues pretty much all the time – losing more than about four hours every day from the nine hour working day will lead to growing inefficiencies. The technology exists to communicate with people on the other side of the world – but the fact remains that when you contact them, they may well be asleep.*

The continental United States is spread over four timezones. From the Atlantic to the Urals, Europe is also spread over four timezones. The same goes for Latin America. Africa is spread over five. Asia and Australasia are rather more spread out – yet if you take South East Asia through to eastern Australia, the time difference is only four hours again, yet covers Australia, Japan, the Phillippines, Indonesia, Thailand and most of China.

These are, geographically-speaking, all entirely practical economic units. Any small businessman on the east coast of America can easily trade with one on the west without needing anything much in the way of complicated planning. A shopkeeper in Portugal can phone a supplier in Turkey, and know he will be able to sort out his orders that same day – possibly even take delivery the same day, if he phones in the morning. But for someone in London to order a vital part from Japan, there remain serious practical difficulties – the nine-hour time difference compounded by a 12-hour flight time. By the time the Japanese supplier has got the message and sent the part, two days might well have passed – which in business terms can prove disastrous.

Today.

So now, by accident at least as much as design, Europe (or, at least, Western Europe) is, in terms of its infrastructure and and geography, about as coherent and sensible a socio-economic unit as most nation states were two centuries ago, before the arrival of the railways and telegraph – if not more so.

Having been working on coming together for longer than other parts of the world, the EU’s institutions, procedures and structures are further advanced. Yet they were not originally planned with the aim of taking advantage of new technologies – but of preventing the conflicts of earlier ages. The overriding feature of the way the EU currently works is the perennial clash between the institutional attempts to find compromises between conflicting national interests (the need for unanimity on substantial changes), and structural fluff designed to flatter the national egos (the hang-on of old school diplomacy that is the veto).

The big fear of the old developed (national) economies over the last decade has been the rise of the new economies of China, India and – to a lesser extent – Brazil. These nationally-focussed concerns have been passed on to the EU – the organisation’s member states have been trying to use the EU as a way of maintaining strength through numbers against the newcomers on the global scene. Technology has allowed for greater pooling of resources and more efficient ways of working, enabling the EU’s member states to maintain the hope that they can compete against the vast potential of India and China – a potential based largely upon those two countries’ huge populations and geographical areas, which on both counts rival those of continents.

Looking to a continental future?

Yet now there are signs of yet more new developments. In the last couple of weeks, two potentially hugely significant events took place – both of which took their inspiration from the European Union, and both of which recognise that continental-scale organisation (or, at least, organisation across several – but not more than four or five – timezones) is both desirable and practical.

First, in Latin America, the members of the Bolivarian Alliance for the Americas (ALBA) decided to adopt a single currency – the SUCRE – explicitly modelled upon the euro. (And before you dismiss ALBA as made up of piddlingly insignificant countries, let’s not forget that the EU started out with just six member states, all still recovering from a devastating war, and three of which were tiny. Let’s also not forget ALBA’s more significant neighbours, who will be watching developments with interest.)

This was swiftly followed by fresh moves by the Association of Southeast Asian Nations (ASEAN) to create a regional bloc – including an EU-style common market and, potentially, a euro-style single currency.

Yes, ASEAN can also be dismissed as being made up of a bunch of relative lightweights – its most significant members probably being Indonesia, Singapore and Thailand, hardly global major players. But this new move shows far greater ambition – having been proposed by Japan, backed by China, and potentially including Australia, New Zealand and even the United States down the line. Any economic bloc including China and Japan among its members is a force to be reckoned with.

A new age?

And so we may be on the cusp of a major shift in global geopolitics and the structuring of the global economy. If these two new continental blocs get off the ground, the EU will have continental competitors for the first time. And the member states of the EU, until now using the benefits of membership to give themselves an economic advantage on the world stage, will find it even harder to compete as individuals.

Of course, timezone practicalities as well as national egos could still prevent the ASEAN plan from ever coing to fruition, but even a smaller-scale version of an Asia-Pacific version of the European Union would herald a major shift in the way the world works.

The upshot? The EU could well be about to shift from being a nice idea to being an absolute necessity.

* Yes, larger organisations can work on a 24-hour basis – but most businesses are not larger organisations. And for an economic community to benefit the most people within it, its advantages must be accessible to everyone without having to stay up all night.

6 Comments

I’m wondering if the ASEAN will acctually survive an attempt to make it more like EUrope, especially with the inclusion of the US and China whose citizens are feircely nationalistic and are notorious for agressively persuing their own national interests without much consideration for others and thats to say nothing about the daunting differences in the political culture of the region. but i suppose this same argument could be made against us EUropeans.
IMO they should have started on smaller more humble scale and slowly expanded very much like we did/are.
But then again thats just my oppinion, good luck to them.

So the latest argument for the EU is because small businessmen need to talk to each other on the telephone in order to conduct international trade?

1. In terms of value most international trade (>90%) is conducted by large 24/7 companies

2. Where small independent businesses conduct international trade then they do this via agents, who will be 24/7 if necessary.

3. Trade is not done on the telephone. Historically this was via telex/fax, but increasingly it is not on the internet. Anyone doing a deal will take at least some days over it. For example as an individual I’ve bought stuff directly from the USA and South Africa on the internet – why go through a middle man if you can avoid it?

The logic of the “competing economic blocs” is that each bloc has its own protective tariff measures, otherwise surely the bloc has no meaning? So presumably if the WTO finally gets to zero tariffs (the EU being the major impediment to this) then on your logic the reason for the EU is much reduced? (actually an EEA argument rather than political EU anyway?)

In this regard there are such things as complementary economies – those that produce raw materials as opposed to manufactures. Historically British Imperial preference of the 1930s had a structure of exchanging British manufactures for Australian and Canadian raw materials and excluding Gerrman and American manufactures – this seems to be a bit more of a logical basis for a bloc I would have thought than the ease of small business telephone calls? (and it seemed to work all right despite the geography?)

Some of this complemtary trading structure still survives today of course with the EU quotas Britain still has for some Antipodean and West Indian foodstuffs. And of course the French do it as well – Reunion and Tahiti are within the EU tariif wall aren’t they, despite the difficulties Frenchmen no doubt have telephoning Paris from the Marquesas?

Why did this kind of “economic empire” bloc structure break down? I don’t think it was because of the difficulty of small business talking on the telephone, but rather because the raw material producers wanted to develop their own manufacturers, but also there were concerned about the military threat from their neighbours. Identity and aspiration rather than geography methinks. Oh, and world war 2 as well.

Note the economic bloc tariff structure only really got going in the 1930s and was instigated by the Americans as a response to the depression – prior to that there was open trade between the former British Dominions and the USA. Mainland Europe in distinction had always had internal tariffs, so they have simply kept the same economically illogical structures at the external EU border and Britain has now been sucked into this structure as well.

It’s surely a moot point whether British manufactured trade gains from being within the EU tariff while having a new external non EU tariff. After all if you take out the oil and gas and Rotterdam transhipment trade (all unaffected by the tariff) then the majority of UK external manufacture export trade is outwith the EU. Clearly Britain loses from having to import much more expensive EU foodstuffs.

Actually of course in the 1930s people argued the new economic blocs would inevitably lead to war – the British/American war scare of the late 1920s and the Japanese and German fear of being denied access to raw materials. Hence the post WW2 UN/WTO agenda.

Which brings us to your lovely new map of the world. I think it’s so 1984 or Diplomacy/Go war strategy board games. Seems to me it’s the old mentality of politicians filling in maps/vanity Empire building rather than any economic logic. Geography is surely much more of a miltary/policing issue than an economic one?

Love the way Europe has ceded Greenland to North America in your map. But Russia is going to be a bit worried being in a different bloc to Europe isn’t it? Economically most of its trade is with the EU (raw material out/manufactures in) so Russia is hardly “competitive” to the EU from an economic sense is it?

Face it – surely these sort of arguments are another version old Imperial vanity politics of 1914 (at least the 1930s had economic logic behind the blocs).

The EU as a vehicle/route/stepping stone to negotiate world free trade via the WTO process ? Are you sure it’s not the problem rather than the solution? Rather like lets build more nuclear weapons to force multilateral disarmament?

As for currency blocs – didn’t we have a global one (the gold standard) until the 1930s as well?

Mark – lots there, and I’ll (hopefully) come back to it properly this evening. Just one quick thing to start, though:

“It’s surely a moot point whether British manufactured trade gains from being within the EU tariff while having a new external non EU tariff. After all if you take out the oil and gas and Rotterdam transhipment trade (all unaffected by the tariff) then the majority of UK external manufacture export trade is outwith the EU.”

Have you got any data to back up those assertions? This is a genuine – and very important – question, as all the trade figures I’ve *ever* seen for British exports over the last 10-20 years show that something in the region of 50-65% of it is with the EU (depending on which figures you take), with the next largest market being the US, at around 15%.

If you have some evidence that the EU is not the most significant market for UK exports, then I may have to rethink.

You then need to take out the oil and gas numbers for yourself (incl. Norwegian hydrocarbon transit). You can get these from the DECC website.

Last time I looked this brought the numbers to 50:50 ish. (you say 50/65 to Europe so we are not far apart)

That’s the easy bit.

The difficult bit (which people argue about) is how much of British exports to Holland (Europoort) and Belgium (Antwerp and Zeebrugge)are for onward continental shipment, and how much are simply container transhipped onto ships for Mid/Far East and USA/Canada export. This confusion arises where companies manufacture in the UK but are not UK based companies (mainly American and Japanese multi-nationals) – e.g. cars and electronics, but also comingled chemical shipments – eg. Nissan, Honda and Toyata re exports via Europort or a lot of the chemical exports to the States from Teesport and Hull. This adjustement brings the numbers closer to something like 60/40 in favour of the rest of the world, although some argue its even higher, maybe 65/35.

Sometimes europhile politicians “cheat” by using financial transfers (also on the DTI website) to boost the importance of Europe. However this measure is meaningless because you can never work out what the global banks are upto and also it includes items like pension payments to retirees in Spain and France (seriously big numbers) plus of course our net EU Project payments.

Regarding my whinge above, a lot of people fling around the phrase “the Empire has gone” (Miliband for example) and mistake these comparisons with previous global bloc structures as some sort of Empire nostalgia.

I can never work out whther this is disengenous or ignorance. In many ways the global Imperial trade structure of the 1920s and 1930s was remarkably similar to the EU structure today.

The Dominions were independent and equal in status to GB (google Statute of Westminster 1931 if you don’t believe me),there was no obligation for a common foreign policy (fortunately for European freedom Australia and Canada took a common view with GB in 1939, but South Africa and Ireland did not). There was however a sort of common tariff, currency and citizenship in terms of right of abode and work. There was also a common final court of appeal (hardly ever used) and notional Head of State. Sound familiar? Actually rather like the EU was in the 1990s apart from the Head of State.

But now the additional competencies taken by the EU means it has become much more integrated than the GB/Dominion relationship ever was. (some people confuse the Dominion structure with India and the colonies which was something else entirely and purely a series of bilaterals controlled exclusively by GB)

So I go back to my rhetorical question, if a bloc is such a good idea why did this bloc (which on paper had a lot more going for it, history, economic complementarity etc.) break up? Whatever you may argue the reasons were for the break up, it certainly wasn’t because of geography inhibiting business as a result of communication difficulties.

It would be interesting maybe to see how important in the world economically a federal state comprising Canada, Australia, New Zealand and the four GB countries might be? Does the job for me I think if a bigger “quaesi national” unit is really necessary in order to “bargain” with the USA and China (i think this is just another EU self justifying bogus argument), although still don’t consider it should have a common currency and certainly no trade barriers with the USA!

Somewhat off topic but useful to note the continuity in history and “globalisation”.

In the nineteenth century Britain generally didn’t restrict immigration and right to work from other countries, but of course then there was no minimum wage or welfare state.

The 1881 national census shows by far the largest minority “ethnic” group in Britain was German. No, not Jews, but skilled workers/small businessmen from Bavaria and Baden fleeing German unification and resultant Prussian business regulations and conscription. My maternal great grandfather was one of them, so I guess he would probably have been against the EU too?

I know about his flight from Baden because the wonderful new unified Germany made him fill in a form and pay an exit fee before he was allowed to leave, whereas Britain just waived him in without any paperwork whatsoever.

Mark – Apologies. I’m not ignoring or avoiding you, it’s just been a busy week, and then I got distracted by press idiocy. I’m still planning on coming back to you properly soon.

(As an unrelated aside, it seems we have something in common – your maternal great grandfather, and my paternal great great grandfather both fled Bismark for Britain. Mine ended up interned on the Isle of Man during the Great War while his son (my great grandfather) fought for Britain on the Western Front, surviving from Charleroi through Verdun and Havrincourt. So much for the glorious liberalism of mythical Britains past, eh? Unless you blame it all on Lloyd George, in which case I’ll probably end up agreeing…)